Recent sanctions by Beijing and Washington have accelerated a trend of economic distancing from China, which in many ways aims to be independent of supplies to critical technology sectors.
As the U.S. continues to blacklist dozens of Chinese companies, Beijing is increasingly imposing its sanctions on U.S. organizations and individuals, accusing them of interfering in China’s internal affairs.
Last month, the U.S. government added 23 Chinese companies to its economic blacklist, including 14 companies suspected of enforcing Beijing’s crackdown on the Uighur Muslim minority in Xinjiang province.
China has responded by imposing sanctions on several US individuals and organizations, including former Commerce Secretary Wilbur Ross and Human Rights Watch China director Sophie Richardson.
China has also passed a law designed to oppose foreign sanctions, allowing Beijing to seize assets and refuse visas to individuals who are involved in sanctions against Chinese interests.
Alex Capri, a Singapore-based researcher at the Hinrich Foundation, an economic institute, told DW that US sanctions against Chinese companies are focused on strategic sectors, meaning that any technology that can be considered dual-use strategic can be targeted.
“The US is looking for any means by which it can put pressure on Beijing,” he said, adding that US sanctions on Chinese companies are accelerating the process of economic disengagement, which is also accelerating Beijing’s drive to become more independent. focusing on local potential.
Chinese companies forced to focus within the region
Other experts agree that US sanctions have forced Chinese tech companies not to continue to rely on the US as a supplier of key components. “Most of them are trying to find local alternatives or create the necessary technologies themselves,” writes Dan Wang, a technology analyst at Gavekal Dragonomics in China. Foreign Affairs.
“The move by former US President Donald Trump achieved what the Chinese government could never achieve: harmonizing the incentives of private companies with the state’s goal of economic self-sufficiency,” he added.
Rui Zhong, a program associate at the Wilson Center, a research center, said Chinese companies are realizing that if US sanctions on Chinese information technology companies like ZTE happen again, it could have an effect on companies’ long-term strategy. It’s reasonable for Chinese firms to have “the mindset that we need to rely more on ourselves,” she told DW.
Does Biden’s strategy differ from Trump’s?
Analyst Capri says that the administration of US President Joe Biden has continued the policies of the Trump administration towards China, but with some important differences. “We see a much more coordinated and concrete approach to expanding policies towards China, as the Biden administration seems to be doing it with the allies,” he said.
Rui Zhong said the Biden administration’s stance on penalizing a Chinese company’s affiliation with the People’s Liberation Army (PLA) and on the issue of forced labor in Xinjiang has not changed much from that of the Trump administration.
“This is actually the status quo that Joe Biden inherited and we have not seen much change from the US State Department,” she added. Analysts also say the United States is trying to prevent China from expanding its model of “techno-authoritarianism,” which, for example, uses technology to increase oversight.
“China’s techno-authoritarian model is a combination of sophisticated technologies used to build infrastructure and apply Artificial Intelligence and algorithms in ways that would promote surveillance, censorship and population control,” Capri said.
Parallel universes of technology
While many predict the U.S. will continue to impose export sanctions and controls on Chinese companies, some experts think the result could be a world of parallel systems, with players trying to operate on both systems if they can. “Global product networks will be fragmented and companies or state actors will find themselves trying to find opportunities to cope with sanctions by adapting to the situation,” says Capri.
Moreover, export bans will force the Chinese government and companies to speed up the process of localization and self-reliance. “It is likely that in a decade, China would have made greater technological advances under the US export control regime than if the United States had not forced China’s major companies to buy from weak domestic firms. “, Writes analyst Dan Wang in Foreign Affairs.
Wang added that the US should not expect China’s leading technology companies to lag behind for long.
“Companies are rushing to meet the demand that American firms can no longer offer, and Chinese firms need to rebuild only certain parts, most of which work only to recreate existing technologies,” he wrote.
Not only Chinese companies have the preoccupation to set up local supply networks. Capri says that if the US government enforces a total ban on imports from Xinjiang, or requires US companies operating from Xinjiang to provide evidence that their products were not made from forced labor, they will also have to take in consider restructuring supply networks.
“They need to start focusing on localization and production closer to their markets,” he said. “There are many companies that do not accept this thinking that it will end. However, we are at the beginning of a completely new era. “
DW
